The pillow was missing but the warranty card and a handwritten note from the seller remained. It wouldn't be logical for the seller to scam the buyer but not keep the card and include a handwritten note that authorities could later use as evidence. However, swiping the watch while attached to the pillow is certainly plausible, especially given the dirty fingerprints found on the Rolex box as reported by the buyer.
I agree that it doesn't look good for the UPS Store given what's transpired and what you've reported about that particular franchise location. But, we're still low on evidence all-around. It's getting interesting though.
The mystery might be answered at the UPS Store but there's no smoking gun (yet) pointing to it being the seller. All we know right now is that there's a weight discrepancy and the watch didn't make it from point A to point B. Anything beyond that is speculation, even with the weights not adding up.
There's no reason for a UPS Store employee (who isn't a UPS employee) to ever inspect package contents for insurance purposes. It would have been handled to pack it per the seller's account of what happened but there's no reason why the UPS Store would have needed to access the contents of the Rolex box. Someone removing it at the seller's home doesn't make much sense, either. A Rolex box is noticeably lighter without a watch inside, plus the seller certainly would have found it by now and informed us of the oversight.
I think you need to look at this with less bias towards the seller. We don't yet know who is at fault. Both the buyer and seller could be 100% innocent. Heck, for all we know the buyer and seller are in cahoots and plan to split the payout 50/50. See how ridiculous things can get when you prejudge an outcome?